Small statement marks big shift in EU-Israel relations

The EU has certainly made a big statement with its decision to ban deals with Israel unless areas containing illegal settlements excluded. But the impact is far greater.

For a relatively small initiative, the European Union has certainly made a big statement with its decision to ban deals with Israel unless they explicitly exclude areas containing illegal settlements. The rule does not take effect until next year and is modest in scope because it applies only to the EU bloc as a whole, leaving individual member states and European companies free to deal with settlements on the West Bank and in Jerusalem.

But the political impact of the decision is far greater: it is the first initiative taken by the EU that targets the illegal settlements that many see as an impediment to achieving peace between the Israelis and the Palestinians.

It is clear that this is one of the few areas in which Israel feels vulnerable. With its military superiority over the Palestinians and with the United States always available to use its veto to block any measures by the United Nations Security Council, Israel faces few immediate threats to its 46-year occupation of the West Bank.

That sense of security has allowed Israel to pay lip service to the peace process while relentlessly changing the facts on the ground by permitting 500,000 settlers to build outposts on Palestinian lands.

But Israel feels vulnerable to the Boycott, Divestment and Sanction (BDS) movement, which was launched in 2005 to exert pressure on Israel. The threat posed by BDS has been taken sufficiently seriously by the Israeli government for it to pass a law making it illegal to advocate boycotting products from Israeli settlements in the West Bank.

The EU decision has to be seen in the context of the BDS movement's increasing momentum. Last month, for example, the Israeli branch of the McDonald's restaurant chain revealed that it was asked to open an outlet in a shopping mall in the Ariel settlement on the West Bank but refused because the company has a policy of staying out of the occupied territories.

The EU is also thought to be close to introducing product labelling rules that will make it easier to identify and boycott goods from illegal settlements.

Israeli politicians were quick to denounce the EU's ban as unacceptable and a barrier to achieving real peace. A cynic might think that sentiment indicates the ban will have the desired effect. Certainly, the terms in which the ban has been described - as an "earthquake" and as a "moment of truth" - underscore the importance of this big shift in international relations.